U.S. Economy Shows Signs of Stalling as Hormuz Reopening Could Lift Market Sentiment
By Tom LoBianco | Quincy News Correspondent
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Washington (Quincy News) — WASHINGTON – A trio of economic indicators released this week pointed to a cautious, largely static national economy. Friday’s news of the reopening of the Strait of Hormuz, however, could ease broader concerns.
Existing home sales dropped to a nine-month low amid labor market concerns, falling 3.6% from the previous month, according to the latest report from the National Association of Realtors. The national median home price climbed to $408,000, up 1.4% from a year earlier.
New jobless claims fell last week to 207,000 — the latest figure showing employers are retaining their existing workforce but remain hesitant to expand headcounts.
But the latest Producer Price Index (PPI) data from the Bureau of Labor Statistics (BLS) showed a sizable softening in price increases, with core PPI, which excludes more volatile food and energy prices, rising just 0.1%.
In its analysis of the latest PPI data, Moody’s attributed the 0.5% increase last month in part to higher energy prices.
But as with most economic data, these figures reflect trends over recent weeks and months, without accounting for the most current developments in the war in Iran. On Friday, Iran’s foreign minister announced the strait had reopened, but President Donald Trump introduced some uncertainty, stating that the U.S’ blockade would continue.
Trump told Reuters in a phone interview Friday that the U.S. would begin buying enriched uranium as part of a deal that could end the war in Iran.
The positive turn in the Middle East immediately energized markets, with the price of Brent crude oil dropping to $90.27 per barrel and the Dow Jones Industrial Average jumping roughly 1,000 points by mid-afternoon Friday.
But the ripple effect from the roughly seven-week closure of the critical shipping channel may not be felt for months, and could potentially spur more layoffs.
Economic observers pointed to historic “shocks” (including the 1973 oil embargo, the 1990 Gulf War, the 2022 invasion of Ukraine and others) that followed major disruptions similar to the closure of the Strait of Hormuz.
“The 2026 Hormuz crisis is the steepest climb and drop. But the line isn’t finished yet,” energy researcher John Bistline wrote on X on Wednesday, before the reopening of the strait was announced.
The latest data points come amid a broader, ongoing period of economic uncertainty, with inflation ticking higher and still running above the Federal Reserve’s 2% target.
And even with the potential for more certainty from the Middle East to end the week, other persistent battles continue – including the upcoming nomination hearing of Trump’s pick for Fed chair Kevin Warsh and the latest showdown between Trump and the current Fed Chair Jerome Powell over whether Powell may remain past his planned May departure.
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